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SA car payment defaults rise, sell yours before it’s repossessed

The index shows that while home loans and retail loans have shown an improvement, car loans have deteriorated by a substantial margin, from 3.67% in March 2020 to 4.10% in March 2021.
Image: Moneyweb

According to Experian’s Q1 Consumer Default Index or CDI for 2021, 23.7 million consumers — with credit cards, personal loans, car loans, home loans and retail loans — have a total of R1.9 trillion in outstanding debt. The index shows that while home loans and retail loans have shown an improvement, car loans have deteriorated by a substantial margin, from 3.67% in March 2020 to 4.10% in March 2021.

Reports by TransUnion and National Debt Advisors have echoed these findings and despite the lockdown relief measures put in place by banks to assist cash-strapped borrowers, car repossessions are rising. Covid-19’s third wave is putting South Africans under even more pressure.  To avoid a repossession, cash-strapped vehicle owners need to react promptly and be wise in weighing up the various options available to them.

I suggest South Africans to not wait until it’s a crisis: If you think that you might struggle with fulfilling your car instalment obligations, be proactive and start making a plan now.

Weelee.co.za provides the following tips for car owners to survive these turbulent times:

  • All cards on the table: Compile a detailed budget with an accurate reflection of your income and expenses. Be realistic about whether you can afford your car’s repayments, running costs, maintenance costs and insurance.
  • As lean as possible: In addition to trimming items on your household budget, try to make your current car more affordable. Examples include shopping around for a good RMI accredited provider to service your car professionally, but more affordably, with OEM parts; buying more affordable, but still good quality tyres; and making sure you use all benefits offered by your maintenance plan and other value-added services.
  • Consider all plans: If you are in good standing with your financial services provider, try to negotiate different terms, such as extending your loan duration to reduce repayments. This may incur more interest, but you’ll be able to keep your car. If you’ve been retrenched, consider using your credit insurance or income protection plan, if you have one, to carry you through times of crisis.
  • Sell it now, buy something better later: Sell your car and scale down to alleviate the financial pressure, saving any surplus for a future deposit or using it to settle other debts.
  • Don’t accept the first offer: Be savvy when selling your prized possession. Research the going rate for your car properly. Don’t simply settle for the first offer and make sure you get maximum cash for your wheels.
  • Consolidate multi-car households: Consider letting go of one or multiple cars to either scale down on the amount of vehicles, or to buy something more suited to your financial and lifestyle needs.
  • Be vigilant: There are many criminals, who often pose as buyers, ready to pounce on unsuspecting sellers. Only use screened, trusted dealers and properly secured platforms.

Our cars are often more than just a mode of transport – they’re an extension of who we are, yet their cost can add significantly to our woes in times of financial difficulty. Through careful planning, clever adjustments and smart selling, we can use them to weather this storm with change to spare.

Marc Friedman, CEO of Weelee.co.za. 

COMMENTS   18

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A common phenomenon in SA on cars : People buy a car ( with money they do not have ) to impress people ( they do not know ) .

And these cars are “fancy ” …way beyond what the normal business owner or serious money conceus person would purchase.

If you are stupid .. the you must suffer

Another common phenomenon in SA: thinking that everyone with something nicer than you can’t afford it, or is in debt or ‘balloon’. Just like how some people have better houses than you, some have better everything too.

A whole 4 percent! You guys have WAY bigger problems.

The moral panic when it comes to cars is just jealousy and projection.

But most are.

Yep. Before I bought a car I used to think the same. People need to learn a simple thing with most cars: a green sticker from Derka means that person got a second hand deal which works great for price.

And those is while the world is in a super bubble, with money being cheapest in history.

Personal loans, retail loans, car loans…… Perhaps we should stop loaning money and stop buying a new car every 4 years to stay in the market?

Why? You guys have been crying about how the end of the world is coming for about 20 years because you saw someone with a nicer car than you. When is it going to happen?

Why doesn’t the logic apply to home loans? Why can you accept many people have nicer homes and holidays than you but it is ‘reckless leading’ when they also have nicer cars? Strange.

Hey…that image must be taken from a blue Honda JAZZ 1,5 EX (2009 – 2014 model range). Great!

I’m first. I’ll take it NOW! How much?

Comment removed

….you must have a vested interest in new car dealers? Holding shares in CMH, Unitrans, McCarthy, Imperial, Barloworld, etc??

Admittedly, following my advice will lead to the detriment of new car dealerships.

If you imply trying to be a successful financial advisor, what car is not important. If you’re really a good fin advisor, the client will DRIVE TO YOU (and will see your fancy house instead).

Me thinks you do protest too much.
Cars does not maketh the person!!!It usually breaks a person.

There is a place for all car/petrolheads etc but what is somewhat saddening is when younger buyers go out and buy cars that are WAY beyond their actual financial means when their wife and children have to make do with sub standard accommodation, food and most importantly EDUCATION.
I have seen this phenomenon happen all too often.

I travel extensively between Jhb and Botswana and in the outlying townships there is often a BMW M something or shabby Range Rover parked in a carport next to a shack.

“…sell yours before its repo’d”.

Why does MoneyWeb assume we all bought vehicles on finance terms? There’s CASH buyers as well. Count me in.

Buy only what u can pay cash for ;NEVER buy a car on credit : Its that simple :

If there is a trend to downsizing this is good for parking in shopping centre car parks. The proliferance of lady shoppers in vehicles built on the chassis of a 3 ton truck is a major threat to adjacently parked cars which are being dented and gouged to death as these people try to manoeuvre their cattle wagons. They don’t even know about the massive damage they doing.

In my view it doesn’t matter what a person drivers it their choice, should that person fail on hard times then they should find ways hence why they have written this article. People are should be left to make their own mistakes and what ever joy they get from their small or big machines it is their choice. Life is short make the best of it, if that one thing I have learned from Covid tomorrow is not promised

Correct – partially. Problem is, that if you survive the covid pandemic, all your future pension has been spent on self-justified toys during this time. Also, as of this morning, less than 78 thousand covid souls have departed, so one seems to have a better chance of surviving covid than to have a comfortable pension. Back to Square One.

You only live once. Buy the Harley. That last frock you don does not have pockets

End of comments.

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